Vi e w p o i n t | 28 Jan 2026 18:38:43 ET │ 9 pages China Economics Lower Growth Target CITI'S TAKE We now expect policymakers to set the growth target for 2026E at 4.5~5%, lower than our earlier forecast (see: 2026 Outlook: Mind the Gap). It would be the first downward revision after three years of GDP growth meeting the "around 5%" target. 13 out of the 20 provinces that have announced their 2026 targets have guided down. Our expected policy package – ~RMB1trn extra fiscal, 20bps rate cut and 50bps RRR c ...

Key Takeaways from the Conference Call Industry Overview - The report focuses on the **China Economics** sector, specifically analyzing the **3Q GDP** performance and its implications for the broader economy [1][4]. Core Insights and Arguments - **GDP Growth Rate**: The 3Q GDP is projected to slow to **4.5% YoY**, a decrease from **5.2% YoY** in 2Q, indicating a broader economic slowdown [2][9]. - **Infrastructure Investment Decline**: A significant contributor to the GDP slowdown is the decline in **infrastructure capital expenditure (capex)**, attributed to a high base of government bond funding and tighter local government liquidity [2][9]. - **Retail Sales Performance**: Retail sales growth has dropped to a **9-month low of 3.4% YoY**, influenced by slow disbursement and reduced effectiveness of trade-in subsidies [2][9]. - **Industrial Production**: Industrial production growth has moderated, with key sectors like manufacturing and infrastructure showing negative growth rates [5][9]. - **Stimulus Expectations**: There is an expectation for a **Rmb0.5-1 trillion** stimulus package aimed at infrastructure and consumption support, which is anticipated to cushion growth in the short term [3][9]. Additional Important Points - **Structural Reforms**: The report emphasizes that sustained economic reflation will depend on structural reforms to rebalance the economy, with particular attention to the upcoming **4th Plenary Session** for potential signals of such reforms [3][9]. - **Debt Management**: The report notes that **92%** of this year's **Rmb2 trillion** debt swap quota has been utilized, indicating a potential strain on local government finances [2][9]. - **Sector-Specific Trends**: The property sector continues to struggle, with new starts down **18.3% YoY**, reflecting ongoing challenges in the real estate market [5][9]. This summary encapsulates the critical insights from the conference call, highlighting the economic challenges and potential policy responses in the context of China's current economic landscape.